Employment rose by a slim 38,000 in August

The last time job creation was as weak was at the start of the year, when an unusually harsh winter and a post-holiday lull put a dent in hiring.

U.S. businesses created just 38,000 new jobs in August, ADP said, the second small increase in a row, pointing to a slowdown in hiring during the summer.

The increase fell short of the Wall Street forecast of 47,000. Nela Richardson, chief economist at ADP, said the labor market is characterized by "choppy hiring."

The Federal Reserve is weighing whether to raise interest rates this month to help reduce the rate of inflation. Top Fed officials believe the labor market is in good condition, leaving them to focus on inflation.

"The labor market is solid, it's stable," John Williams, president of the New York Federal Reserve Bank, said in a CNBC interview Wednesday.

By law the Fed is suppose to ensure low unemployment as well as low inflation.

But is the labor market really stable? There's not a lot of hiring going on. But on the flip side, businesses aren't laying off many workers, either.

In any case, the ADP report is an appetizer of sorts ahead of the main course for markets: the official U.S. employment report on Friday.

Economists predict a 53,000 increase in new jobs in August based on information collected by the Bureau of Labor Statistics.

The two reports sometimes differ sharply month to month, but they head in the same direction over time.

Key details: The estimated 38,000 increase in private-sector jobs in August as determined by ADP follows a revised gain of 46,000 in July.

The last time job creation was that weak was at the start of the year, when an unusually harsh winter and a post-holiday lull put a dent in hiring.

Most of the new jobs, as usual, were concentrated in healthcare. An aging population always needs more doctors, nurses and healthcare assistants.

Hiring also increased in construction and finance. A boom in artificial intelligence has spawned the building of large data centers, while a rising stock market has increased demand for financial advice.

Employment declined in most other major industries.

Another sign of tepid hiring: The average increase in wages was just 3% in the 12 months that ended in August, bumping along prepandemic lows.

If businesses were hiring more aggressively, wages would rise more rapidly.

Big picture: The U.S. doesn't need to add as many new jobs as it used to in order to keep the unemployment rate low because of a slow-growing population.

Hiring was unusually weak during the summer, but it may partly reflect changing seasonal patterns of when companies create new jobs. Employment has been slow during the summer for three years in a row, based on the BLS report.

Even if that's the case, however, jobs are harder to find and hiring is unlikely to accelerate sharply anytime soon.

Market reaction: The Dow Jones Industrial Average DJIA and S&P 500 SPX were set to rise slightly in Wednesday trading.

-Jeffry Bartash